As has been widely reported, early last
|
|
- Della Norris
- 5 years ago
- Views:
Transcription
1 Volume 23, Number 5 February 2007 Subprime Lending Lessons from the Ameriquest Settlement Joseph E. Mayk Joseph E. Mayk is of counsel in the consumer financial services/retail banking practice group of Blank Rome LLP. He is resident in the firm s Philadelphia office, where his practice focuses on advising lenders on all aspects of consumer finance regulatory compliance. Mr. Mayk can be reached at mayk@ blankrome.com. As has been widely reported, early last year Ameriquest Mortgage Company and related companies settled a multistate investigation over certain allegedly deceptive consumer lending practices. The settlement included $295 million to repay borrowers with loans originated between January 1, 1999 and December 31, 2005, plus $30 million to pay for the investigations. 1 Like Household Finance Corporation s nearly $500 million settlement with the states in 2002, and to a lesser extent Citigroup s $215 million and $70 million settlements with the Federal Trade Commission and the Federal Reserve Board (which did not explicitly require as many changes to Citi s lending practices), the Ameriquest settlement represents another mile marker in an emerging best practices road map for subprime consumer mortgage lending. As such, lenders are well advised to compare the terms of this settlement to their current practices. The purpose of this article is to highlight certain terms of the settlement and suggest issues that lenders may wish to consider with respect to their own consumer mortgage lending programs. Keep in mind, however, that no new requirement imposed on Ameriquest is required of any other lender (at least not yet). ORAL DISCLOSURES The settlement requires a number of oral disclosures for Non-Prime loans (defined as first lien loans where the APR is equal to or greater than two and a half percentage points above the yield for a treasury security of comparable maturity and, for junior lien loans, five percentage points above the comparable treasury security yield). The oral disclosures, which are in addition to already existing Truth-in-Lending Act (TILA), Real Estate Settlement Procedures Act (RESPA), and other mandated written disclosures, cover the key loan terms, such as the repayment term, interest rate, monthly payment, existence of a prepayment penalty, whether amounts are escrowed, amount and effect of any discount points, and adjustable rate disclosures for adjustable rate mortgages (ARMs). If the application is not submitted orally, the substance of the oral disclosures must be provided in writing within three days of receiving the application. Significantly, instead of imposing general requirements, the settlement agreement provides scripted language for these disclosures, which Ameriquest must use, or alternative language that is substantially similar. Over the years, lenders have had different views on the utility of scripted oral disclosures. While some have found them to be impractical or too restrictive to the sales process, other lenders have seen the value in oral scripts (especially when coupled with listening programs) in helping to ensure consistency in the sales process, as well as in reducing the risk of deceptive sales claims. In addition to the specific scripted oral disclosures, the settlement agreement contains a number of negative covenants that prohibit Ameriquest employees from making potentially misleading statements. For instance, Ameriquest cannot represent that its interest rate or terms are better, lower than, or competitive with those of other lenders, unless the representations are, in
2 fact, true. The Household settlement also contained a number of provisions prohibiting Household from making misleading representations. These are obviously prudent policies for lenders to have in place. While scripts can be very helpful in protecting a lender from claims of misrepresentation, it is also important that loan officers and others understand that statements should not be made which contradict, undermine or obscure the more specific disclosures. WRITTEN DISCLOSURE OF LOAN TERMS The settlement also requires Ameriquest to provide consumers with a single page disclosure of the key loan terms within three days after obtaining loan pricing information (but in no event later than three days after when an appraisal or loan documents have been ordered). This requirement applies to all loans, and not just non-prime loans. The form of written disclosure contains information similar to that which Ameriquest is required to provide in the oral disclosures for non-prime loans. Household was also required by the regulators to implement a one page summary of key loan terms. A clear, concise, written disclosure of key loan terms is another tool that can help protect lenders from deceptive sales claims. Disclosures required by RESPA and TILA have been in effect for many years now, but are often insufficient to protect a lender from misrepresentation claims even when properly given. In fact, there is a wide consensus among both lenders and consumer advocates that the current federal disclosures are unnecessarily confusing to consumers. Of course, any lender considering a simplified summary disclosure must ensure that it is consistent with the disclosures required by state and federal law. REDISCLOSURE Another key component of the settlement is a requirement to give a new written summary disclosure if there is a material change in the loan terms. The new disclosure must be mailed no less than six days before closing or otherwise delivered or made available to the consumer at least three days before closing for a non-prime refinance loan or one day before closing for all other loans. A change is material if there is an increase in the interest rate of 30 basis points or more, or any increase in discount points other than as a result of the trading of discount points for an interest rate reduction that is affirmatively requested by the borrower; any increase in the repayment term of the loan; a decrease in the loan amount greater than one percent; the addition of a prepayment penalty; or a change from a fixed rate to an adjustable rate loan. The concept of redisclosure is currently the subject of much discussion in the mortgage industry. For instance, it is expected that any RESPA reform on the horizon will deal with redisclosure of the good faith estimate if there is a change in the terms beyond some sort of tolerance. The concept of redisclosure here seems to make sense, especially for any lender that chooses to provide an early disclosure of material loan terms that is not otherwise required by state or federal law. For instance, if a lender provides an early disclosure of material loan terms, it would not want to face a bait and switch claim if the final loan terms are different. Timely redisclosure helps protect against such a claim. LOAN PRICING Ameriquest must use a pricing model for loans that is designed to produce (before application of any price exception) the same interest rate and number of discount points for all potential borrowers with the same credit risk characteristics and who are the same with respect to any other material characteristics (e.g., loan-to-value ratio, type of property, etc). This part of the settlement commits Ameriquest to maintaining a policy that it voluntarily instituted in 2003 as part of a best practices initiative. A price exception is defined as the offering of a rate that is lower than the rate for which the borrower otherwise qualifies under the pricing model. To make sure that the use of price exceptions is not undermining the pricing model, the settlement provides that if in any ninety day period the number of borrowers receiving a price exception exceeds thirty percent of the loans originated during that period, there will be a rebuttable presumption that Ameriquest has violated this part of the settlement agreement. However, the term price exception does not include a price reduction that is necessary to keep a loan below federal and state high cost loan triggers or price reductions in certain other limited circumstances. Thus, loans where pricing is reduced in such cases do not count against the 30 percent cap. This part of the settlement, along with restrictions on employee compensation discussed below, would seem to eliminate the use of overage pricing by Ameriquest. This is just the latest sign that overage compensation programs are receiving increased scrutiny from regulators and the secondary market. New York, for example, has for the past few years required lenders to describe their policy on overages. 2 The secondary market has also gotten more active in regulating the amount of points that can be charged in a transaction For instance, Fannie Mae and Freddie 2 REAL ESTATE FINANCE FEBRUARY 2007
3 Mac generally limit the total points and fees to 5 percent of the loan amount. Many private investors impose similar restrictions. The public scrutiny of pricing data now captured by HMDA has further highlighted the potential fair lending risk. Lenders engaged in discretionary pricing need to seriously consider the benefits and risks of continuing to do so, and, at a minimum, should put policies in place (such as back-end closed loan reviews and front-end listening) to minimize the risk that pricing is creating a fair lending issue. BORROWER BENEFIT Ameriquest is also prohibited from entering into any nonprime refinance loan that does not provide a benefit to the borrower and must document how each such loan provides a borrower benefit. Unlike the federal Home Ownership and Equity Protection Act (HOEPA) and some state high cost lending laws, there is no time limit on the refinancing. Thus, it appears that Ameriquest must perform this borrower benefit test in every non-prime refinance transaction, regardless of when the refinance occurs in relation to the making of the original loan. Note also that the definition of a non-prime loan (APR that is two and one half percentage points for first lien loans and five percentage points for subordinate lien loans over the comparable treasury security yields) will capture many loans that are subject to neither HOEPA nor state high cost loan laws. While this provision is unique to Ameriquest and the particular dictates of the settlement, it should be noted that the concept of suitability is becoming more prevalent in the mortgage industry. For instance, with the exception of certain prime loans, Massachusetts requires that a borrower s interest test be run on any consumer mortgage that refinances another consumer mortgage made within the prior sixty months. 3 On a related point, Ameriquest is prohibited from soliciting borrowers with existing non-prime loans for refinancing within the first 24 months unless: Ameriquest receives a request for a pay-off statement; is contacted by a borrower who inquires about refinancing; or otherwise has a good faith belief that the borrower is considering refinancing. In any case, the refinancing must still provide a benefit to the borrower. INDEPENDENT LOAN CLOSERS; WHISTLEBLOWING Ameriquest is required to use independent loan closers for the closing of all non-prime loans. A loan closer is independent if he is not an employee of the branch office where the loan is originated or a relative of such an employee, and has no financial interest in the loan being closed other than payment of standard settlement fees. Each independent loan closer must be given written instructions on the closing and must provide a written report to Ameriquest senior management if the loan closer discovers any unfair, deceptive, misleading or unlawful behavior by any Ameriquest employee in connection with the loan. Further, Ameriquest employees are only permitted to attend non-prime closings if requested by the borrower. The instructions given to the loan closer must require the closer to fully explain the closing process and the loan documents, and prohibit the closer from pressuring or rushing the borrower, including by suggesting that the borrower can use the TILA rescission period to read the loan documents. This part of the settlement agreement is an example of good, common sense closing practices. While it is unlikely that your independent loan closer will have sufficient recollection of a particular transaction in the event there is ever a problem, having policies that show a sensitivity to these issues can only help a lender s case. LOAN FUNDING Ameriquest is required to disburse the funds on all refinance loans on the first business day after the expiration of any rescission period. However, the settlement agreement also acknowledges that Ameriquest need not disburse the proceeds of any loan until it is reasonably satisfied that the borrower has not rescinded the transaction, as required by Regulation Z to TILA. This highlights an often overlooked issue under Regulation Z. The Commentary to Regulation Z gives examples of how a lender can satisfy itself that the consumer has not rescinded (i.e., by waiting a reasonable time after expiration of the rescission period to allow for delivery of a mailed notice by the consumer or obtaining a written statement from the consumer that the right has not been exercised). 4 While these are not the exclusive means of confirming that a consumer has not chosen to rescind, they highlight the fact that a lender is prohibited from disbursing funds until it is reasonably satisfied that the consumer has not rescinded. 5 This is a requirement that is often overlooked by many lenders that simply disburse immediately upon the expiration of the rescission period, without attempting to confirm that the consumer has not elected to rescind. APPRAISALS The settlement also establishes a very detailed program dealing with the independence of the appraisal function; in FEBRUARY 2007 REAL ESTATE FINANCE 3
4 particular, in ensuring that the branches play the smallest role possible in the appraisal process. This is achieved by the creation of a panel of qualified, approved appraisers for each state. When a file is opened, an automated system assigns the appraisal to an appraiser based on an algorithm that is designed to limit the discretion of Ameriquest employees. To be selected for a panel, the appraiser must be in good standing with his or her state licensing authority and must have had their past work product audited for quality and compliance if they have previously done appraisals for Ameriquest. Perhaps most significant, Ameriquest is required to comply with the October 28, 2003, guidance issued by the federal banking agencies, which stresses the need for independent appraisal and evaluation functions. 6 Significantly, an Ameriquest affiliate, Argent Mortgage, entered into a Cease and Desist order with the state of Georgia in September 2005, under which it was essentially required to follow a 2003 White Paper on detecting and deterring mortgage fraud (including appraisal-driven fraud) issued by the Federal Financial Institutions Examination Council. Given these developments, lenders would be wise to familiarize themselves with the existing federal banking standards on appraisals and property evaluations, subjects on which state law is largely silent. Since at least the early 1990s, the federal banking agencies have established regulations and guidelines on a variety of appraisal and evaluation issues (e.g., independence, licensing versus certification, appraisals versus property evaluations, etc.). 7 STATED INCOME LOANS This part of the settlement prohibits Ameriquest employees from inflating or fabricating the source or amount of a borrower s actual income, or encouraging a potential borrower to do so. In addition, the independent loan closers are required to have the borrower sign a statement at closing certifying that: a. The borrower understands that the loan has been approved based on the amount of income reported by the borrower, b. The amount of income reported is accurate, c. If the borrower s actual income is less than the amount set forth in the application, the borrower understands that there is a significant risk that the borrower will not be able to afford the loan, and d. That any false statements may subject the borrower to criminal penalties. The settlement also requires Ameriquest to employ a reasonableness standard in its underwriting guidelines to determine that the amount of stated income is appropriate for the occupation and experience claimed. For instance, if the stated income is based on self-employment or a home-based business, Ameriquest must request evidence of the existence of the business. As stated income loans have become increasingly available in the subprime market over the past few years, these would appear to be prudent underwriting practices for subprime lenders to implement. Remember also that stated income loans are effectively prohibited for loans that meet the HOEPA triggers. When the Fed amended the HOEPA regulations back in 2002, it created a presumption that HOEPA is violated when a lender engages in a pattern or practice of making high cost loans without documenting and verifying repayment ability. 8 COMPENSATION PROGRAMS With respect to employee compensation, Ameriquest cannot provide incentives to encourage its employees to include a prepayment penalty, quote a borrower an interest rate that is inconsistent with the same rate available provision discussed previously, or otherwise increase compensation based on loan fees or closing costs. As with the same rate available settlement provision, this provision highlights the growing sensitivity toward overage policies and other methods of compensating loan officers based on interest rates, points or other fees obtained above a certain level. CONCLUSION The Ameriquest settlement is only the latest (and likely not the last) salvo in the regulation by investigation campaign launched by state banking departments and attorneys general over the last several years. High profile, high dollar settlements like this, the Household and Citi settlements and the Fairbanks settlement in the servicing area effectively create an additional layer of practices for lenders and servicers to seriously consider, since the terms of the settlements often go beyond the specific requirements of existing statutes and regulations governing the mortgage business. In many instances there is no allegation of a violation of any specific mortgage lending law (such as the charging of an impermissible fee or the failure to give a required disclosure) that underlies the investigation. Instead, the investigations are often premised on more general allegations of unfair or deceptive conduct. The inherent elasticity of such a claim makes it difficult for lenders to see the boundaries. These types of settlements, for good or ill, bring those boundaries into clearer focus. 4 REAL ESTATE FINANCE FEBRUARY 2007
5 It is important to understand that these settlements are not aberrations. The state attorneys general, in particular, have become increasingly active in multi-state investigations of various industries. The subprime mortgage lending business will likely continue to be a focus of attention, especially as the market continues to be roiled by a spike in foreclosures, early payment defaults, and the attendant negative publicity. The federal banking agencies nontraditional mortgage guidance, with its focus on appropriate consumer disclosure of the risks and benefits, will likely provide another avenue of investigation for state regulators, as numerous states have adopted the federal guidance. For now, lenders should use these settlements as a way to gauge their potential exposure. A simple comparison of the settlement terms to your current lending programs, disclosure practices, pricing and compensation policies, etc. will go a long way toward letting you know whether you may soon find yourself in the regulators crosshairs. NOTES 1. The settlement agreement is publicly available and can be found on most state attorney general and department of banking Web sites. 2. See N.Y. Comp. Codes R. & Regs. tit. 410, 410.8(g), 410.8(h). 3. See Mass. Gen. Laws ch. 183, 28C; see also 209 Mass. Code Regs , et seq. 4. See Official Staff Commentary, (c)-4; Official Staff Commentary, (c) See 12 C.F.R (c); 12 C.F.R (c). 6. See, e.g., OCC Advisory Letter (Oct. 28, 2003). 7. See, e.g., 12 C.F.R (Jun. 7, 1994); Interagency Appraisal and Evaluation Guidelines, SR (Oct. 28, 1994); OCC Bulletin , Frequently Asked Questions on Appraisal Regulations, the Interagency Appraisal and Evaluation Guidelines, and OCC Advisory Letter (Mar. 22, 2005). 8. See 12 C.F.R (a)(4). Reprinted from Real Estate Finance February 2007, Volume 23, Number 5, pages 21-25, with permission from Aspen Publishers, Inc., Wolters Kluwer Law & Business, New York, NY, , Law & Business
RULES AND AMENDMENTS TO REGULATION Z
Attorneys at Law Arlington Office 2310 W. Interstate 20, Suite 100 Telephone: 918-461-5500 Arlington, Texas 76017-1868 Fax: 817-856-6060 RULES AND AMENDMENTS TO REGULATION Z OCTOBER 1, 2009 In an effort
More informationReasons for Change. Are You Ready for the Regulation Z & RESPA Changes. Past, Present & Future Changes
Are You Ready for the Regulation Z & RESPA Changes Community Bankers Association of Illinois Annual Convention September 26, 2009 Presented by: Young & Associates, Inc. 1 Past, Present & Future Changes
More informationBoard of Governors of the Federal Reserve System; Truth in Lending
Board of Governors of the Federal Reserve System; Truth in Lending ABA Contact: Bob Davis (202) 663-5588 rdavis@aba.com Joe Pigg (202) 663-5480 jpigg@aba.com Rod Alba (202) 663-5592 ralba@aba.com Krista
More informationThe Federal Reserve s HOEPA Proposal and Subprime Related Legislation by. Locke Lord Bissell & Liddell LLP Barnett Sivon & Natter P.C.
The Federal Reserve s HOEPA Proposal and Subprime Related Legislation by Charlotte M. Bahin Raymond Natter Locke Lord Bissell & Liddell LLP Barnett Sivon & Natter P.C. After receiving significant pressure
More informationFREQUENTLY ASKED QUESTIONS ABOUT THE NEW HMDA DATA. General Background
Federal Reserve Bank of New York Statistics Function March 31, 2005 FREQUENTLY ASKED QUESTIONS ABOUT THE NEW HMDA DATA General Background 1. What is the Home Mortgage Disclosure Act (HMDA)? HMDA, enacted
More information11 th Annual Eastern Secondary Market Conference. February 5-7, 2014 The Hyatt Regency Orlando
11 th Annual Eastern Secondary Market Conference February 5-7, 2014 The Hyatt Regency Orlando Scott D. Samlin Partner Scott Samlin is a New York partner in the firm s Financial Services & Products Group.
More informationMORTGAGE REFORM AND ANTI-PREDATORY LENDING ACT of 2009
MORTGAGE REFORM AND ANTI-PREDATORY LENDING ACT of 2009 (As Passed by House of Representatives) Laurence E. Platt 202.778.9034 larry.platt@klgates.com K&L Gates 1601 K St., NW Washington, DC 20006 fax:
More informationAny person, who for direct or indirect compensation, assists a consumer in obtaining or applying to obtain a residential mortgage loan; or
Mortgage Reform and Anti-Predatory Lending Act Although it has received far less attention than other titles of the Dodd-Frank Act (the Act or Dodd-Frank ), such as those addressing derivatives, too big
More informationThe New World of Mortgage Regulation A Look Back - A Look Around and a Look Forward. Barry D. Johnson Shareholder SettlePou
The New World of Mortgage Regulation A Look Back - A Look Around and a Look Forward By Barry D. Johnson Shareholder SettlePou 3333 Lee Parkway, 8 th Floor Dallas, Texas 75219 (214) 520-3300 bjohnson@settlepou.com
More informationMORTGAGE LENDING PRINCIPLES & PRACTICES, 8TH ED. 2ND PRINTING
MORTGAGE LENDING PRINCIPLES & PRACTICES, 8TH ED. 2ND PRINTING Updates listed most recent to previous Chapter 8 Updates 01.09.2019 Page 220: Consumer Rights Add after last bullet As of May 24, 2018, nationwide
More informationConsumer Regulatory Changes
Consumer Regulatory Changes Federal Reserve Board Division of Consumer and Community Affairs August 19, 2010 Visit us at www.consumercomplianceoutlook.org The The opinions expressed in in this this presentation
More informationMortgage terminology.
Mortgage terminology. Adjustable Rate Mortgage (ARM). A mortgage on which the interest rate, after an initial period, can be changed by the lender. While ARMs in many countries abroad allow rate changes
More informationNew Lending Rules. Copyright 2014 The CE Shop. All rights reserved. 1
New Lending Rules In this session we re going to be talking about some new lending guidelines and some new forms that will impact your clients, said Mike. We ll see how that fits in with the title of the
More informationTruth in Lending / RESPA Regulatory Changes
Steve H. Powell & Company Truth in Lending / RESPA Regulatory Changes Truth in Lending and RESPA Update Note: This publication is not offered as legal advice. Readers should seek legal counsel for advice
More informationNavigating the Regulatory Compliance Environment for Investment and BusinessPurpose Mortgage Loans
THE BANKING LAW JOURNAL Navigating the Regulatory Compliance Environment for Investment and BusinessPurpose Mortgage Loans Allison Botos Schilz and Abigail M. Lyle* In today s regulatory environment, lenders
More informationKentucky STATE HIGH COST/PREDATORY LENDING REGULATIONS Last Updated: 2/22/18 By: RC Coded: 3/1/2018 By: ZB Reviewed: By:
Kentucky STATE HIGH COST/PREDATORY LENDING REGULATIONS Last Updated: 2/22/18 By: RC Coded: 3/1/2018 By: ZB Reviewed: By: LAW: Kentucky Revised Statutes (Kentucky Revised Statutes Chapter 360.100(2)(a-z))
More informationLesson 13: Applying for a Mortgage Loan
Real Estate Principles of Georgia Lesson 13: Applying for a Mortgage Loan 1 of 64 341 Choosing a Lender Types of lenders Types of lenders include: savings and loans commercial banks savings banks credit
More informationFannie Mae Updates Compliance with Laws and Responsible Lending
June 24, 2014 Fannie Mae Updates Compliance with Laws and Responsible Lending By Anna DeSimone June 24, 2014, Fannie Mae published Ann. SEL-2014-07: Selling Guide Updates. The Selling Guide has been updated
More informationTIPS BULLETIN #13-17
TIPS BULLETIN #13-17 To: Subject: All Credit Unions Ability to Repay & Qualified Mortgage Standards under the Truth in Lending Act (Regulation Z) The material in this publication is provided for educational
More informationPrepared for: Borrower. 123 Main Street. Anytown, US 10000
FORENSIC COMPLIANCE AUDIT Prepared for: Borrower 123 Main Street Anytown, US 10000 2 Contents Document Review... 5 Summary of Findings. 6 Compliance Review 8 Compliance Details....11 Loan Details. 18 Loan
More informationAnand S. Raman Bank Counsel Conference. November 13, Skadden
Fair Lending Update Anand S. Raman Louisiana Bankers Association 2008 Bank Counsel Conference November 13, 2008 Loan Modification Becomes Central Focus FDIC IndyMac plan Massachusetts AG action against
More informationMortgage Terms Glossary
Mortgage Terms Glossary Adjustable-Rate Mortgage (ARM) A mortgage where the interest rate is not fixed, but changes during the life of the loan in line with movements in an index rate. You may also see
More informationMortgage Bankers and Brokers Association of New Hampshire
Mortgage Bankers and Brokers Association of New Hampshire March 24, 2014 Ken Markison, MBA Regulatory Counsel Presented by David H. Stevens President, Mortgage Bankers Association Introduction Seven weeks
More informationCREDIT RISK MANAGEMENT GUIDANCE FOR HOME EQUITY LENDING
Office of the Comptroller of the Currency Board of Governors of the Federal Reserve System Federal Deposit Insurance Corporation Office of Thrift Supervision National Credit Union Administration CREDIT
More informationHome Equity Disclosure Booklet
Home Equity Disclosure Booklet People s United Bank peoples.com Effective June 2017 L0014 6/17 00 1 Home Equity Disclosure TITLE PRODUCT* PAGE SECTION I. When Your Home is on the Line HELOC 2 SECTION II.
More informationAfter-tax APRPlus The APRPlus taking into account the effect of income taxes.
MORTGAGE GLOSSARY Adjustable Rate Mortgage Known as an ARM, is a Mortgage that has a fixed rate of interest for only a set period of time, typically one, three or five years. During the initial period
More informationQualified Mortgages and Qualified Residential Mortgages under the Dodd-Frank Act
Qualified Mortgages and Qualified Residential Mortgages under the Dodd-Frank Act Kenneth Benton Senior Consumer Regulations Specialist Greg Bell Banking Supervisor Consumer Compliance Risk Team FEDERAL
More informationx Trusts Other: Other: x RHS x Lot Loan x Borrower Interim x HELOC
North Carolina STATE HIGH COST/PREDATORY LENDING REGULATIONS Last Updated: 2/23/18 By: BH Coded: _3/2/2018_ By: _ZB Reviewed: 3/5/2018 By: B H LAW: NC High Cost Home Loan Law NC Rate Spread Home Loans
More informationMarch 29, Proposed Guidance-Interagency Guidance on Nontraditional Mortgage Products 70 FR (December 29, 2005)
1001 PENNSYLVANIA AVENUE, N.W. SUITE 500 SOUTH WASHINGTON, D.C. 20004 Tel. 202.289.4322 Fax 202.289.1903 John H. Dalton President Tel: 202.589.1922 Fax: 202.589.2507 E-mail: johnd@fsround.org 250 E Street,
More information6/21/2013. Section I. Purpose of Course. History and Overview of Mortgage Law, Regulation and Requirements
20 Hour Mortgage Loan Originator Certification Course Purpose of Course Gain historical perspective of mortgage lending Understand contemporary mortgage loan origination process Examine federal rules,
More informationRandall S Kroszner: Legislative proposals on reforming mortgage practices
Randall S Kroszner: Legislative proposals on reforming mortgage practices Testimony by Mr Randall S Kroszner, Member of the Board of Governors of the US Federal Reserve System, before the Committee on
More informationForensic Review Report
Forensic Review Report Prepared by Aequitas Borrower: John Smith Date: 7/9/2009 Copyright 2009 MHI. All Rights Reserved. 2 of 19 TABLE OF CONTENTS Review Letter... 4 Forensic Review Summary... 5 Forensic
More informationSection 1.35 Compliance Overview
Section 1.35 Compliance Overview In This Section This section contains the following topics: Overview... 2 Related Bulletins... 2 Nationwide Mortgage Licensing System Registry (S.A.F.E. Act)... 3 Nationwide
More informationLoan Disclosures and Terms - Closed-End Residential Mortgage Loans. Loan Disclosures and Terms - Other Residential Mortgage Loans
Exam Date: [Click&type] Exam ID No. [Click&type] These (Procedures) consist of modules covering the various elements of the mortgage origination process; each module identifies specific matters for review.
More informationTITLE VII WALL STREET REFORM AND CONSUMER PROTECTION ACT OF 2009 (FORMERLY H.R. 1728)
TITLE VII WALL STREET REFORM AND CONSUMER PROTECTION ACT OF 2009 (FORMERLY H.R. 1728) Section 102 Section 103 Section 104 Section 106 Section 107 Section 201 Section 202 Section 203 Title I: Residential
More informationExecutive Summary of the 2017 TILA- RESPA Rule
1700 G Street NW, Washington, DC 20552 July 7, 2017 Executive Summary of the 2017 TILA- RESPA Rule On July 7, 2017, the Consumer Financial Protection Bureau (Bureau) issued a final rule (2017 TILA-RESPA
More informationAbility-to-Repay and Qualified Mortgage Rule (ATR/QM Rule)- Effective 1/10/14
Ability-to-Repay and Qualified Mortgage Rule (ATR/QM Rule)- Effective 1/10/14 1) Dodd Frank requires that lenders make a reasonable, good-faith determination that the loan applicant has a reasonable ability
More informationUpdate on Unfair and Deceptive Acts and Practices (UDAP): Select Regulatory and Legislative Activity
Update on Unfair and Deceptive Acts and Practices (UDAP): Select Regulatory and Legislative Activity A presentation to the Financial Service Committee of the Association of Corporate Counsel By: John T.
More informationTRID (TILA-RESPA Integrated Disclosures) Presented by:
TRID (TILA-RESPA Integrated Disclosures) Presented by: What is TRID? TRID will eliminate the use of the good faith estimate, truth in lending disclosures, and HUD-1 Settlement Statement. They will now
More informationSection 1.35 Compliance Overview
Section 1.35 Compliance Overview In This Section This section contains the following topics: Overview... 2 General... 2 Overview... 2 Related Bulletins... 2 General... 2 Nationwide Mortgage Licensing System
More informationTHIS IS NOT LEGAL ADVICE
I. Ability to Repay (ATR) Qualified Mortgage (QM) Overview In 2008 the Board of Governors of the Federal Reserve System adopted a rule under the Truth in Lending Act prohibiting creditors from making higher-priced
More informationCFPB Consumer Laws and Regulation
Secure and Fair Enforcement for Mortgage Licensing Act 1 The Secure and Fair Enforcement for Mortgage Licensing Act of 2008 2 () was enacted on July 30, 2008, and mandates a nationwide licensing and registration
More informationHUD s New RESPA Rule
1300 Nineteenth Street, NW Fifth Floor Washington, DC 20036 202.628.2000 www.wbsk.com HUD s New RESPA Rule November 24, 2008 On November 17, 2008 the United States Department of Housing and Urban Development
More informationCompliance Challenges in a Changing Economic Environment
Compliance Challenges in a Changing Economic Environment Call the Fed Audio Conference December 10, 2008 The following presentation contains the views and opinions of the speakers and his or her interpretation
More informationTILA-RESPA Integrated Disclosure rule
May 2018 TILA-RESPA Integrated Disclosure rule Small entity compliance guide Guide for creating on-brand reports Version Log The Bureau updates this Guide on a periodic basis to reflect finalized clarifications
More informationWhat s New in Mortgage Lending Compliance?
What s New in Mortgage Lending Compliance? Michael R. Christians Senior Federal Compliance Counsel Credit Union National Association Copyright 2016 by Credit Union National Association. All rights reserved.
More informationThe new Loan Estimate Form integrates and replaces the existing RESPA Good Faith Estimate and the initial Truth in Lending forms.
The Consumer Financial Protection Bureau s (CFPB) integrated mortgage disclosure rule will be effective August 1, 2015. This rule consolidates four existing disclosures required under Truth-in-Lending
More informationFederal Reserve System Primary Market Secondary Market
Chapter 14: Real Estate Financing: Practices Introduction to the Real Estate Financing Market Federal Reserve System Primary Market Secondary Market Federal Reserve System Role Maintain sound credit conditions
More informationNotice Regarding Updated Regulations and Summary of Recent CFPB Mortgage Rules
April 23, 2012 Notice Regarding Updated Regulations and Summary of Recent CFPB Mortgage Rules The Consumer Financial Protection Bureau ( CFPB or Bureau ) recently issued final rules related to mortgage
More informationMortgage Financing. Mindy Stern, Esq. Schwartz Sladkus Reich Greenberg Atlas LLP New York, New York
Mortgage Financing by Mindy Stern, Esq. Schwartz Sladkus Reich Greenberg Atlas LLP New York, New York 61 62 4. Mortgage Financing By Mindy Stern, New York, NY A. Sources of Financing Institutional Lenders
More informationFacing Today s Real Estate Regulations
Proudly Sponsored by Facing Today s Real Estate Regulations Presented by Don Braspenninckx Day, June 11, 2016 1:30 p.m. 1 Introduction Numerous regulatory changes in the real estate industry within last
More informationYour Company Name. 123 Main St., Anytown, CA Fax
Your Company Name 123 Main St., Anytown, CA 99999 555-555-1212 555-555-1213 Fax www.forensicmortgageauditor.com Mary@forensicmortgageauditor.com Type of Report: Forensic Mortgage Audit Date Prepared: 11/10/2009
More informationReal Estate Settlement Procedures Act UNITED STATES CODE TITLE 12. BANKS AND BANKING CHAPTER 27--REAL ESTATE SETTLEMENT PROCEDURES
Real Estate Settlement Procedures Act UNITED STATES CODE TITLE 12. BANKS AND BANKING CHAPTER 27--REAL ESTATE SETTLEMENT PROCEDURES Real Estate Settlement Procedures Act; Regulation X 11/15/2006 WKFS CompliSource
More informationIMPORTANT TERMS OF OUR HOME EQUITY LINE OF CREDIT
IMPORTANT TERMS OF OUR HOME EQUITY LINE OF CREDIT This disclosure contains important information about our Home Equity Line(s) of Credit (Plan). You should read it carefully and keep a copy for your records.
More informationUnderstanding CFPB Rules CONSUMER FINANCIAL PROTECTION BUREAU
Understanding CFPB Rules CONSUMER FINANCIAL PROTECTION BUREAU The Consumer Financial Protection Bureau The CFPB is a new federal agency Created by Dodd Frank Wall Street and Consumer Protection Act Dodd
More informationFair & Responsible Lending in the Regulatory Crosshairs
Fair & Responsible Lending in the Regulatory Crosshairs Legal Counsel to the Financial Services Industry Minnesota Banking Law Institute April 5, 2013 Andrea K. Mitchell Partner Lori J. Sommerfield Counsel
More informationAdvertising Compliance
Advertising Compliance John Zasada Principal 218 790 1086 1 1 Credit Union Compliance Practice Review websites and social media for compliance before CU release Ongoing Regulatory Compliance Assistance
More information2/4/2014. Consumer Financial Protection Bureau Update A New Era of Regulation Begins. A Quick Overview of the CFPB. CFPB Overview (cont.
Consumer Financial Protection Bureau Update A New Era of Regulation Begins A Quick Overview of the CFPB The CFPB was created by Title X of the Dodd-Frank Act and became operational on July 21, 2011 Independent
More informationRegulatory and Enforcement Trends
NY2 717563 Regulatory and Enforcement Trends April 11, 2013 2013 Morrison & Foerster LLP All Rights Reserved mofo.com Agenda We will provide an overview of the regulatory and enforcement trends that may
More informationReal Estate Finance: 10/17/2017. Why use a mortgage?
Real Estate Finance: McGraw-Hill/Irwin Laws and Contracts Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved. Fixed rate (Monthly charge is 1/12 of stated annual rate) Adjustable rate
More informationHow to Start Planning for the CFPB Mortgage Rules. May 2, 2013
How to Start Planning for the CFPB Mortgage Rules May 2, Jon Bundy Regulatory Compliance Manager CUNA Mutual Group 608-665-7101 Jonathan.bundy@cunamutual.com Agenda Short Review of Each Rule We will avoid
More informationCOMMENTS to OCC, FDIC, NCUA, FRB, and FCA. regarding. 12 CFR Parts 22, 172, 208, 339, 614, and 760 Docket ID OCC , FRB Docket No.
COMMENTS to OCC, FDIC, NCUA, FRB, and FCA regarding 12 CFR Parts 22, 172, 208, 339, 614, and 760 Docket ID OCC 2014 0016, FRB Docket No. R 1498 RINs 1557 AD84, 7100 AE22, 3064 AE27, 3052 AC93, and 3133
More informationSUMMARY ANALYSIS OF HUD S PROPOSED REVISIONS TO ITS RESPA REGULATIONS PREPARED FOR THE AMERICAN LAND TITLE ASSOCIATION
SUMMARY ANALYSIS OF HUD S PROPOSED REVISIONS TO ITS RESPA REGULATIONS PREPARED FOR THE AMERICAN LAND TITLE ASSOCIATION July 30, 2002 Sheldon E. Hochberg Steptoe & Johnson LLP Washington, D.C. 202-429-6218
More informationRemarks by Governor Edward M. Gramlich At the Texas Association of Bank Counsel 27th Annual Convention, South Padre Island, Texas October 9, 2003
Remarks by Governor Edward M. Gramlich At the Texas Association of Bank Counsel 27th Annual Convention, South Padre Island, Texas October 9, 2003 An Update on the Predatory Lending Issue I am happy to
More informationHOME EQUITY LINES OF CREDIT What you should know about them.
HOME EQUITY LINES OF CREDIT HOME EQUITY LINES OF CREDIT TABLE OF CONTENTS Home Equity Plan Checklist What is a Home Equity Line of Credit (HELOC)? 2 3 What should you look for when shopping for a plan?
More informationHome Equity Disclosure Booklet. Section III.HELOC, HEL, TaxSaver TM Notice to Mortgage Loan Applicant
Authorization to Obtain Credit Report Before you make an application for credit, please note that all applicants must authorize People s United Bank to obtain a credit report for each applicant. The information
More informationCFPB Laws and Regulations
Laws and Regulations Truth in Lending Act 1 The Truth in Lending Act (), 15 U.S.C. 1601 et seq., was enacted on May 29, 1968, as title I of the Consumer Credit Protection Act (Pub. L. 90-321). The, implemented
More information6/21/2013. Section III. Federal Rules, Regulations and Their Requirements. Federal Regulations. Federal Regulations
Section III Federal Rules, Regulations and Their Requirements Federal Regulations The federal rules, regulations and requirements in this course are complied into 4 categories for analysis: Laws requiring
More informationThis regulation Part is promulgated pursuant to the authority granted in R.I. Gen. Laws and (b).
230 RICR 40 10 3 TITLE 230 DEPARTMENT OF BUSINESS REGULATION CHAPTER 40 BANKING SUBCHAPTER 10 LENDING PART 3 Home Loan Protection Act 3.1 Authority This regulation Part is promulgated pursuant to the authority
More informationRESPA/TILA Integration
RESPA/TILA Integration 1 Presented by: Richard Hogan, Vice President & Associate General Counsel Tracy Pandolfo, Director Agent Services Agenda Basics: Why We re Here Final Rule The New Forms Evaluating
More informationReverse Mortgage. Examination Procedures
Examination Procedures Reverse Mortgage Servicing Exam Date: Exam ID No. These examination procedures apply to reverse mortgage Prepared By: servicing and are a stand-alone resource to complete a reverse
More informationNational Mortgage Loan Originator Review Crammer (ml) Federal Mortgage-Related Laws
Course: Lesson: National Mortgage Loan Originator Review Crammer (ml) Federal Mortgage-Related Laws 1. According to HMDA, what must be forwarded to the regulator by March 1 of each year? A. Adverse Action
More informationHome Valuation Code of Conduct Q&A
1 of 6 12/4/2009 1:37 PM Home Valuation Code of Conduct Q&A The Code 1. What loans are impacted by the Code? 2. Does the Code apply to non-origination valuation activities such as loss mitigation activities?
More informationCFPB Consumer Laws and Regulations
Homeowners Protection Act (PMI Cancellation Act) 1 The Homeowners Protection Act of 1998 ( or PMI Cancellation Act, or Act) was signed into law on July 29, 1998, became effective on July 29, 1999, and
More informationRULE CONCERNING GOOD-FAITH TEMPORARY REGISTRATION FOR MORTGAGE BROKERS. [Eff. 09/30/2007]
DEPARTMENT OF REGULATORY AGENCIES Division of Real Estate RULES REGARDING MORTGAGE BROKERS 4 CCR 725-3 [Editor s Notes follow the text of the rules at the end of this CCR Document.] Rule A Mortgage Brokers
More informationUnderstanding the Regulatory Compliance Framework for Commercial and Business-Purpose Mortgage Loans
ONE VOICE. ONE VISION. ONE RESOURCE. MBA s COMMERCIAL / MULTIFAMILY FINANCE Understanding the Regulatory Compliance Framework for Commercial and Business-Purpose Mortgage Loans IN COOPERATION WITH 18292
More informationRegulation X Real Estate Settlement Procedures Act
Regulation X Real Estate Settlement Procedures Act The Real Estate Settlement Procedures Act of 1974 (RESPA) (12 U.S.C. 2601 et seq.) (the Act) became effective on June 20, 1975. The Act requires lenders,
More informationBest Practices for Borrower Ability to Repay Rules
March 30, 2012 Best Practices for Borrower Ability to Repay Rules by Anna DeSimone President & Founder About one year ago, I published an article entitled Borrower Repayment Ability on the Radar. The article
More informationS Analysis of Regulatory Relief for Credit Union
S. 2155 Analysis of Regulatory Relief for Credit Union June 2018 SECTION Minimum Standards for Residential Mortgage Loans (Section 101) Adds a new safe harbor category of Qualified Mortgages (QMs) to Section
More informationTHE CLOSING DISCLOSURE
THE CLOSING DISCLOSURE Coverage: Most Closed-End Consumer Mortgages Not HELOCs, reverse mortgages or mobile home loans not attached to real property Agency/Citation: Consumer Financial Protection Bureau
More informationMortgage Reform Under the Dodd-Frank Act
Mortgage Reform Under the Dodd-Frank Act Kenneth Benton Senior Consumer Regulations Specialist September 20, 2013 FEDERAL RESERVE BANK OF PHILADELPHIA DISCLAIMER: The views expressed are the presenters
More informationFraud For Profit. Fraud for Property. Rescue Schemes
Fraud For Profit Most Prosecutions- Large Dollar losses High foreclosure rates, neighborhood impact Fraud for Property Liar s Loans High foreclosure rates Rescue Schemes Vulnerable victim Types of Mortgage
More informationPolicy or Policies. Commercial, Lending policy. Consumer, Business Loans Originations & Servicing. Loan origination. Lending policy.
Bank: as of date TABLE OF LAWS AND REGULATIONS CONSUMER PROTECTION LAW...AND MORE (Does not include BSA/AML/OFAC/CIP) REG NAME/Recent Update - Blue generally not included in Consumer Compliance, purple
More information2013 Home Ownership and Equity Protection Act (HOEPA) Rule Guide
March 2016 2013 Home Ownership and Equity Protection Act (HOEPA) Rule Guide Small entity compliance guide Version Log The Bureau updates this guide on a periodic basis to reflect finalized clarifications
More informationFinal RESPA Rule Requirements
Final RESPA Rule Requirements 1 Final RESPA Rule Requirements The Department of Housing and Urban Development (HUD) released its final rule on the Real Estate Settlement Procedures Act (RESPA) on November
More informationTRUTH-IN-LENDING CHECKLIST FOR CLOSED-END TRANSACTIONS 1 By Frederick L. Miller, UAW Legal Services - Detroit June 4, 1999
TRUTH-IN-LENDING CHECKLIST FOR CLOSED-END TRANSACTIONS 1 By Frederick L. Miller, UAW Legal Services - Detroit June 4, 1999 Client: Case No.: Title and Date of Document Analyzed 1. Check for running of
More informationHOW THE CALDWELL QC PLAN MEETS HUD REQUIREMENTS
Q-5 How the Caldwell QC Plan Meets HUD Requirements HOW THE CALDWELL QC PLAN MEETS HUD REQUIREMENTS Every FHA-approved mortgage lender, including loan correspondents, must implement a written quality control
More informationNC General Statutes - Chapter 24 1
Chapter 24. Interest. Article 1. General Provisions. 24-1. Legal rate is eight percent. Except as otherwise provided in G.S. 136-113, the legal rate of interest shall be eight percent (8%) per annum for
More informationMortgage Lending Compliance Issues Session 1. Higher Priced and High-Cost Mortgages
Mortgage Lending Compliance Issues Session 1 Higher Priced and High-Cost Mortgages Today s Topics Learn the definitions of Higher Priced and High Cost Mortgages and how to test to determine if you are
More informationNew RESPA Rule FAQs. (New items are in bold)
New RESPA Rule FAQs (New items are in bold) General 1) Q: When does the new RESPA Rule take effect? A: The November 2008 RESPA Rule was effective January 16, 2009. Implementation of the provisions are
More informationNew Lending Opportunities in the Changed Mortgage Market: Dodd-Frank Act Mortgage Regulations
New Lending Opportunities in the Changed Mortgage Market: Dodd-Frank Act Mortgage Regulations Kenneth Benton Senior Consumer Regulations Specialist May 14, 2014 FEDERAL RESERVE BANK OF PHILADELPHIA Disclaimer:
More informationGold Cert SM Endorsement to Mortgage Guaranty Master Policy. Effective Date of Endorsement:
Mortgage Guaranty Insurance Corporation 250 E. Kilbourn Avenue P.O. Box 488, Milwaukee, Wisconsin 53201-0488 MGIC Gold Cert SM Endorsement to Mortgage Guaranty Master Policy Insured s Name and Mailing
More informationLunchtime Data Talk. Housing Finance Policy Center. Mortgage Origination Pricing and Volume: More than You Ever Wanted to Know
Housing Finance Policy Center Lunchtime Data Talk Mortgage Origination Pricing and Volume: More than You Ever Wanted to Know Frank Nothaft, Freddie Mac Mike Fratantoni, Mortgage Bankers Association October
More informationCONSUMER. Home Improvement Scams Alert
CONSUMER Information for Advocates Representing Older Adults National Consumer Law Center Home Improvement Scams Alert CONCERNS Many low-income elderly homeowners are targeted by scam artists who use high
More informationLoan Disclosures and Terms - Closed-End Residential Mortgage Loans. Loan Disclosures and Terms - Other Residential Mortgage Loans
f e[ [Click&type] f je oo [Click&type] These (Procedures) consist of modules covering the various elements of the mortgage origination process; each module identifies specific matters for review. Examiners
More informationJune 12, Dear Sir or Madam:
1120 Connecticut Avenue, NW Washington, DC 20036 1-800-BANKERS www.aba.com World-Class Solutions, Leadership & Advocacy Since 1875 Robert R. Davis Executive Vice President Mortgage Markets, Risk Management
More informationREQUEST FOR GUIDANCE ON THE CONSUMER FINANCIAL PROTECTION BUREAU S MORTGAGE ORIGINATION REGULATIONS. Updated September 26, 2013
REQUEST FOR GUIDANCE ON THE CONSUMER FINANCIAL PROTECTION BUREAU S MORTGAGE ORIGINATION REGULATIONS Updated September 26, 2013 TABLE OF CONTENTS HIGHEST PRIORITY Ability to Repay Regulation... 5 1. Self-employed
More informationRandall S Kroszner: Protecting homeowners and sustaining home ownership
Randall S Kroszner: Protecting homeowners and sustaining home ownership Speech by Mr Randall S Kroszner, Member of the Board of Governors of the US Federal Reserve System, at the American Securitization
More informationNC General Statutes - Chapter 53 Article 21 1
Article 21. Reverse Mortgages. 53-255. Title. This Article shall be known and may be cited as the Reverse Mortgage Act. (1991, c. 546, s. 1; 1995, c. 115, s. 1.) 53-256. Purpose. It is the intent of the
More informationBasics in Mortgage Lending Test for Loan Officers
Basics in Mortgage Lending Test for Loan Officers Name: Date: Company Name: 1. The purpose of the Equal Credit Opportunity Act is: To discourage predatory lending To create new avenues and programs for
More information